Tax cut is rocket fuel for America’s small business recovery

President Donald Trump has signed into law a $1.5 trillion tax overhaul package. Trump touted the size of the tax cut, declaring to reporters in the Oval Office before he signed it Friday that 'the numbers will speak.' (Dec. 22)

AP

Just one month into the new year, the new federal tax cut is already off to a roaring start, and small business has a lot to do with that. After years of unfair and excessive levies, the new tax code trusts small firms to do what they do best: grow. Americans have always known that when small businesses prosper, we all do. Now, tax cuts are proving that wisdom right—along with the economics behind it.

It all starts with the new 20 percent deduction that rewards small businesses for creating and keeping good American jobs. The old code slapped on ridiculously high rates—as high as 40 percent. Productivity was smothered, and Main Street was too often stuck treading water. In my line of work, I source commercial capital for acquisition, refinance and construction projects that are not accessible through traditional banking methods. I, like so many others, held out hope for a better way.

In December, President Trump and Congress delivered. With tax cuts in sight, small business added almost 100,000 new jobs. In the many states like Missouri, where small firms account for nearly 100 percent of all firms and about half of all private sector jobs, news that the vast majority of taxpayers will start getting relief this year came like a gift from above.

Of course, the big difference is that these tax cuts aren’t a gift. They’re the government standing back and letting hardworking Americans keep the revenue they need to reinvest in their livelihoods and their neighborhoods.

Small business spending creates a virtuous circle of economic stability and productivity. For evidence, consider this: while small business confidence is rising to all-time highs, Americans now place more confidence in small business than any other major institution— even more than the military, the police, or organized religion! All that positive energy encourages and rewards reinvestment, which is exactly what an economy needs to bounce back big and strong from tough times.

That’s where the genius of the new tax code really kicks in. Lawmakers recognized that, when a recovery is underway, labor markets tighten up as jobs are filled and created. To attract talent, small businesses need to offer more and better-paying positions, added locations, and improved facilities and equipment. When small businesses are taxed to death, they can’t make those investments. Forced into stagnation, they leave the economy stagnant too. Thanks to tax reform, they can keep and spend the money they need to grow their economic pie—and ours.

No wonder people around the country are catching on to what a big deal the new tax code is. Even before passage, most expected to see a boost or a windfall. Most looked forward to the coming year with a healthy optimism, convinced that we were entering into an economic recovery. Now, with more than three-fourths of economists predicting significant economic expansion in 2018, public enthusiasm about the code has jumped 10 percent over just the past several weeks.

The numbers don’t lie—today, the number of Americans who say the economy is good or excellent is the highest in 17 years. Majorities of Democrats, independents and Republicans say they now feel good about the economy. Regardless of partisan affiliation. As House Speaker Paul Ryan recently put it, “the good news hasn’t stopped rolling in since tax reform became the law of the land.”

And the truth is, the news is really getting around. Small businesses don’t just improve state and local fortunes. They’re critical to keeping America on top in global markets. For too long, wealthy countries in Europe and Asia have attracted substantial business that our old tax code pushed overseas. Now, those foreign competitors are getting ready for those jobs and that cash to come back to our shores—where small firms and their customers are more than ready to welcome them with open arms.

2018 is already shaping up to be a defining year in the American comeback now underway. For that, we’ve got our powerhouse small businesses to thank — and the tax cuts filling their tanks with economic rocket fuel.